Credit card tips for first-time cardholders

Applying for your first credit card may help you develop responsible financial management skills – and may eventually open the door to more financing options. Start your financial journey off on the right foot by learning about key considerations before applying for a credit card.

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Credit cards aren’t magic money. You are borrowing the money you charge to the credit card and you must pay it back.”

Look for low interest rates

A low interest rate will minimize the amount of interest you’ll need to pay if you carry a balance from one statement period to the next. Since “promotional rates” typically only last a few months, make sure you know what the interest rate will be once the introductory period is over. If you pay your account balance in full each month, you may avoid paying interest altogether.

Secured vs. unsecured credit cards

Unsecured credit cards don’t require you to provide collateral – such as funds in your checking or savings account – in order to be approved. However, you generally need to have a good credit history to qualify for one of these cards. If you are new to credit or don’t qualify for an unsecured credit card, a secured card is an alternative that requires an upfront deposit to be used as collateral toward your account.

Know the fees

When applying for a credit card, you’ll notice different features and benefits. Credit cards with more features and rewards often have a higher annual fee, while basic credit cards may have low or no annual fee. Credit cards typically charge fees for other transactions, such as cash advances or balance transfers.

The most important thing to remember is that credit cards aren’t magic money. You are borrowing the money you charge to the credit card and you must pay it back. While it might seem easy to swipe now and pay later, carrying a high balance or being unable to make your minimum payment can hurt your credit long into the future.

By staying in control and making timely payments, your first credit card may help you build a strong credit score and a solid financial future.